INDIAN ECONOMY ON THE
EVE OF INDEPENDENCE
AMRITPAL KAUR
Before the British rule
• The Indian economy of the 18th century
was primarily an agricultural economy.
• The prominent handicraft industries :
-Cotton and silk textile
-Metal industries
-Precious stone works
-Gold and Silver jewellery
- Perfumery etc.
Indian Economy during the
British Rule
• Own Economic interest:
- protect and promotion
of Britain’s economic interests
• Feeder economy:
-supplier of raw materials
- consumer of finished
product of British industries
AGRICULTURE SECTOR
• Agriculture sector was stagnant
• Zamindars exploit the cultivator by imposing lagan
irrespective of their Poor economic condition
• Zamidars took the land of farmers when they were not able to
deposit the Lagan on fixed dates
• British forced the commercialization of agriculture
-encouraged the production of cash crops
instead of food crops
– Due to shortage of food crops country had to suffered from
frequent famines
– Low levels of technology,
– Lack of irrigation facilities
– Negligible use of fertilizers
INDUSTRIAL SECTOR
• Dominated by British Rule : Importer of finished goods
and exporter of raw material
• Known for Handicrafts
• Only one sixth (about17%) of the GD
• Cotton textile mill by Indians in Maharashtra and Gujarat,
• Jute mills dominated by the foreigners in Bengal.
• Tata Iron and Steel Company (TISCO) were incorporated in 1907.
• Public Sector : restricted to the railways, power generation,
communication, ports etc.
• Hardly any capital goods industry
• Decline in Indian handicraft industries leads to massive
unemployment
FOREIGN TRADE
• Discriminatory Trade Policy of Britishers:
-Duty free export of Indian raw material
- Duty free import of finished goods from
Britain
• Export surplus was used make to payments for
expenses incurred on war fought by the British
government
• More than half of India’s foreign trade was restricted
to Britain while the rest was allowed with few other
countries like China, Ceylon (Sri lanka) and Persia
(Iran).
FEATURES OF INDIAN ECONOMY ON
THE EVE OF INDEPENDENCE
• Stagnant Economy: Little or no growth
-Bulk of population
- Low Standard of living
-Epidemics & starvation
• Backward Economy: Per Capita -1947-48 : Rs. 230
• Agricultural Backwardness: 72% Population engaged
- contribution in GDP 50%
- Low Food production
• Industrial Backwardness: Lack of basic & heavy industries
- Production of machines: negligible
- Small & Cottage industries: ruined
- For capital goods : dependence on Britain
FEATURES OF INDIAN ECONOMY ON
THE EVE OF INDEPENDENCE
• Rampant Poverty: Widespread unemployment & Illiteracy
• Poor Infrastructure: Extremely low: communication means, Transport ,
power
• Heavy Dependence on Imports: Machinery & equipments
- Consumer goods: sewing machine ,medicine , bicycle
& kerosene oil etc.
• Limited Urbanization: 14% lived in Urban areas
- Lacked opportunities outside agriculture
• Semi-feudal Economy: neither wholly feudal nor a capitalist
-Low production
• Colonial Economy: Exploitation of economy
AGRICULTURE SECTOR ON THE EVE OF
INDEPENDENCE
• Low Production and Productivity: Production=Total production
- Productivity=output per hectare
• High Degree of Uncertainty : Depends upon rainfall
- No efforts to develop means of irrigation
• Dominance of Subsistence Farming : Production for self
consumption
- Little surplus & lack of commercial outlook
• Gulf between Owners and Tillers of Soil: Owners: interest in Max.
rental income
- Tillers: merely given enough for subsistence
• Small and Fragmented Holdings: Uneconomic
- Yield low and cost high
AGRICULTURE SECTOR ON THE EVE OF
INDEPENDENCE
• Land Revenue System under British Raj: Triangular Zamidari
system
- Govt.-Zamidars- Tillers
-Zamidars : real owners
• Forced Commercialization of Agriculture:
-In place of conventional crops: Indigo= natural dye
- dye – blue color = required by textile industry
- farmers – now need to have cash to buy food
•
•
•
•
INDUSTRIAL SECTOR ON THE EVE OF
INDEPENDENCE
Systematic Decentralization
Decay of Handicrafts : Discriminatory Economic and Political polices
Discriminatory Tariff Policy of the State
Disappearance of Princely Courts
- Nawabs, Rajas, Princes and Emperors: used to patronize handicrafts
• Competition from Machine Made Products: low cost
- Out-excelled Indian handicrafts in quality and precision/exactness
- Forced to shut down business
• New Patterns of Demand: New class emerged: adopted western
culture
-changed demand in favor of British products
- Indian industry perished
INDUSTRIAL SECTOR ON THE EVE OF
INDEPENDENCE
• Introduction of Railways in India: Increased size of market for
British goods
- Shrinked size of market for Indian products
- Quicked process of decay of Indian handicrafts
BLEAK/MODERATE/NOTIONAL
GROWTH OF MODERN INDUSTRY
• Industries Established by Private Enterprises
- Iron, Steel, Sugar, Cement and Paper Industries
-Tata Iron and Steel Company (TISCO): 1907
- Established due to world wide scarcity of food due to
World War- I & II
• Limited State Participation : Confined only in areas –British Products
- Railways
- Power generation
- Development of Ports
- Means of Communication
• No Capital Goods Industry : Industrialization- lopsided
- Not even nor balanced
FOREIGN TRADE UNDER BRITISH RULE
FOREIGN TRADE UNDER BRITISH RULE
• Net Exporter of Primary Products and Importer of Finished
Goods
- R.M.: Raw Silk, Cotton, Wool, Jute, Indigo, Sugar etc.
-Import: Cotton , Silk and Woolen cloths , capital goods
• Monopoly Control of India’s Foreign Trade
- More than 50% Foreign Trade directed towards Britain
• Surplus Trade but only to benefit of Britain
- To cover up administration and war expenses
- Huge drain of wealth from India
DEMOGRAPHIC PROFILE DURING
BRITISH RULE
DEMOGRAPHIC PROFILE DURING
BRITISH RULE
• Birth Rate and Death Rate
-BR: 48 per 1000
-DR: 40 per 1000
- Show massive poverty
• Infant Mortality Rate (Death Rate below 1 Year)
- Then: 218 per 1000
- Now: 34 per 1000
- Show poor healthcare
• Life Expectancy
- Then: 32 years
- Now : 68 years
• Literacy Rate
-Overall: 16%
-Female: 7% only
- Show Social Backwardness
-Gender bias
THEORY OF DEMOGRAPHIC
TRANSITION
• STAGE-I : High Birth and Death Rate
- Birth Rate : Social beliefs and customs
- Death Rate: Lack of sanitation and medical facilities
• STAGE-II: High Birth and Low Death Rate
- 1921: Stage of Population Explosion
• STAGE-III: Low Birth and Low Death Rate
- Due to: -Economic change
- Change in Social attitude
- Family Planning Facilities
OCCUPATIONAL STRUCTURE ON THE
EVE OF INDEPENDENCE
• Agriculture: The Principal Source of Occupation
-India : 72% population
- US: 2%
- Japan: 12%
-Germany: 4%
• Industry : An Insignificant Source of Occupation
- Only 9% population
• Unbalanced Growth
-Balanced: When all sectors grow equally
- Economy: Infant stage of growth
INFRASTRUCTURE ON THE EVE OF
INDEPENDENCE
• Railways
- To transport British goods from Britain
• Ports
- Export of raw material to Britain
- Import of finished goods from Britain
• Post and Telegraph
- Enhance administrative efficiency
• Roads
- Facilitate transportation of raw material from different parts
to ports
IMPACT OF RAILWAYS IN INDIA
POSITIVE IMPACT
NEGATIVE IMPACT
• Facilitated expansion of
Domestic Market
• Commercialization of
Agriculture
• Enabled People to break
barriers of Distance
• Faster movement of Food
grains across different parts
of country
• Contributed to Colonial
Exploitation
• Destroyed Indigenous goods
market
• Spread of Domestic market
for British products
POSITIVE IMPACT OF BRITISH RULE IN
INDIA
POSITIVE IMPACT OF BRITISH RULE IN
INDIA
• Commercial Outlook of the Farmers
- Started considering market price to take production decision
• New Opportunities of Employment
- Railways and Roadways
• Control of Famines
• Monetary System of Exchange
- Facilitated: Division of Labour
Specialization
Large Scale Production
• Efficient System of Administration
- Left legacy of effective Administration System
- Served as reference for our Politicians and Planners
POSITIVE IMPACT OF BRITISH RULE IN
INDIA
• Education System
• Social Reforms
- Abolition of Caste system
• Introduction of Technology
- Railroads and Telegraph lines